national debt

Question 1

public sector borrowing

Answer 1

the amount the government must borrow each year to finance their spending. occurs when they are running a budget defecit

Question 2

national debt

Answer 2

a measure of the accumulated national debt owed by the government sector

Question 3

key causes of a budget deficit

Answer 3

-recession causing rising ue, leading to more gov spending
-demographic factors eg ageing population (pensions)
-increasing interest rates on debt

Question 4

issues with debt

Answer 4

-may lead to higher taxes or cutting of gov spending
-servicing the debt restrains current spending
-placed a burden on future tax payers
-could lead to financial crowding out
-will lead to a lower credit rating & be harder to borrow in future

Question 5

fiscal multiplier

Answer 5

measures the effect of a £1 change in spending or a £1 change in tax revenue on the level of gdp

Question 6

Ricardian equivalence

Answer 6

people will not alter spending after tax cuts due to the awareness taxes will have to rise in the future